1. Field of the Invention
The present invention relates generally to a system for securities analysis, particularly, to a system for combining disparate time-relevant securities analyses, and, more particularly, to a system for variably combining a technical price and volume analysis with a fundamental analysis for a given security, and displaying the time-relevant results of the combination.
2. Background and Objects of the Invention
The analysis and prediction of trends in the stock market is clearly a matter of intense interest. With the increasing power of computers, stock analysis and securities portfolio management have become more sophisticated, and with the rise of the PC, more mainstream. Individuals now track their investments and monitor the stock market automatically in an attempt to spot a hot issue. With the increasing availability of historical information pertaining to a given stock, family of stocks or other groups of stocks, patterns can be deduced and purchases made in anticipation of a predicted trend.
Currently, there are two primary tools or methodologies in security analysis: technical and fundamental. Each has its advantages and disadvantages, discussed below, in analyzing stocks, futures (commodities), indices, mutual funds, bonds, options and other securities.
In technical analysis, security movements are predicted by examining past price movements, e.g., volume (number of shares sold) of a particular issue, issues or market index. Technical data includes the price and volume figures for stocks, Open Interest for commodities (futures) contracts, and related information. More particularly, technical data on price includes the open (first sale price of the trading day), high (highest trading price of the day), low (lowest sale price of the trading day), and/or the close (the last trading price of the day). Further price information could also include open, high, low and close prices on an hourly, a weekly, monthly and yearly basis. Additionally, technical data such as the daily price at which the most shares were sold for a particular issue and similar data are also useful. Similar volume information is also available. "Technical trading systems" perform hypothetical buying and selling decisions based on the price and volume history as well as various rules. Because of the frequency or periodicity of technical data, buying and selling decisions may be made on a regular basis.
Fundamental analysis, however, used primarily for stocks, is based on much more loosely-defined data such as found in company disclosures. In other words, fundamental data may be defined as any value-oriented corporate data used to help qualify and quantify an investor's expectations for a company's future. The use of company reports, SEC reporting requirements and publications, security analysts' projections and a host of other sources of information are just part of the fundamental equation.
Fundamental data may include, for example, earnings per share (EPS), i.e., the after expense earnings of a company over a particular time period divided by the number of outstanding shares of that issue; a "quick ratio" for a general measure of how a company can cover its debts, i.e., a measure of liquidity calculated by taking cash, short-term investments and accounts receivable and dividing their sum by the total current total liabilities, where short-term investments includes current inventory; dividends, i.e., an amount of money or "cut" paid to shareholders on a periodic basis; net worth, i.e., the total amount of monetary worth of a company if all assets were immediately liquidated, which includes current inventory, cash on hand, buildings owned, intellectual property and other assets; and capital gains, price-to-earnings (PE) ratio, profit/loss statistics, etc. Whereas technical data is usually stored on a daily (or other regular period) basis, fundamental data is less frequent and more irregular, such as every quarter. In addition to the above differences, "Fundamental Systems" using fundamental data are more intuitive decision systems than those for technical systems using objective and ordered historical data. Because fundamental data is more subjective in nature, analysis is typically reserved for stocks. For example, one may examine the top X number of stocks based on their price performance and find that a presumably large percentage of the associated companies had several consecutive quarters in which the reported Earnings Per Share (EPS) disclosures were noticeably higher as compared to the same quarter last year and that this chain of increased EPS statements preceded a sharp rise in stock price for the following, i.e., current, year. Even though statistical analysis of fundamental data yields strong correlations, i.e., a quite reliable indicator, the data is infrequent and generally comes in after long intervals, leaving the investor at risk during the interims.
It is, therefore, apparent that a combination of the technical and fundamental methodologies would be an advantageous advancement in the art. Applicants are, however, not aware of any system, that combines or merges both technical and fundamental data simultaneously. Applicants discovered that serious non-trivial problems stand in the way of such a combination. For example, the data and data structures used in both methodologies differ substantially and are quite cumbersome and computationally demanding to meaningfully conjoin. Since there are more than 9,000 different common stock issues trading on the three major American stock exchanges (NASDAQ, New York Stock Exchange, and the American Stock Exchange), a typical set of technical and fundamental data calculations for all or a subset of common stocks would easily entail hundreds of thousands of calculations daily. More fine analysis on an hourly or other intra-daily basis would increase the calculations enormously taxing even powerful computer systems.
Accordingly, it is an object of the present invention to provide an improved securities analysis system to facilitate the analysis of securities on a computer system.
More specifically, it is an object of the present invention to provide an improved securities analysis system for simultaneously and meaningfully combining historical securities data under both a technical and a fundamental methodology into a coherent format.